Tracked Senate Bills – February 2021

Feb 16, 2021 | Advocacy

Jeffry Harris
Bricker & Eckler LLP

 

 

State News:

State Budget introduced by Governor DeWine: On February 1, the DeWine Administration introduced its executive budget plan for State Fiscal Years 2022 – 2023, to be considered by the Ohio General Assembly.  With planned expenditures of $85.76B in SFY 2022 and $85.81B in SFY 2023, the budget neither proposes an increase in taxes (other than a $10 fee increase to register motor vehicles), deploying the state’s $2.69B rainy day fund, nor a significant reduction in spending.  The biennial budget is somewhat “normal” in most respects, despite the current circumstances, because one-time resources – such as the federal government’s assumption of a greater share of the state’s Medicaid spending (approximately $300MM in federal assistance each calendar quarter) – are being utilized.

The budget is pending an Ohio General Assembly legislative bill assignment.

The budget plan includes $1B in one-time spending by the state to address the impacts of the COVID-19 public health emergency:

  • $460MM for small business relief, including: $200MM in grants for bars and restaurants, $50MM for grants for lodging industry businesses, $40MM for indoor entertainment venues; and $20MM for new businesses that started in 2020.
  • Enhanced services to minority businesses
  • $200MM for “Ohio Community” infrastructure projects such as drinking water infrastructure improvements, preparing job ready sites, and blighted property removal
  • $250MM for expanding broadband access
  • $50MM to promote the state by “telling Ohio’s story to the rest of the country”

Ohio’s tax exemptions forego more than $9B/year in lost revenue:  According to a formal report published by the state’s Tax Expenditure Review Committee, the state will forego an estimated $9.16B in State Fiscal Year 2022 and $9.54B in SFY 2023 under 138 exemptions and credits available under Ohio law.  These estimates represent an increase over similar tallies in recent years.  Such reports are required to be published along with the Governor’s executive budget proposals.

Exemptions of sales and use taxes comprise the largest portion of the expenditures ($5.94B in SFY 2022 and $6.16B in SFY 2023, or 65% of each respective year’s costs of foregone revenue).

Other so-called tax expenditures (i.e., foregone revenue) include:

  • Income tax – $2.3B (SFY ’22)
  • Commercial Activity Tax (CAT) – $693.5MM (SFY ’22)
  • Public Utility Excise Tax – $108.8MM (SFY ’22)
  • Insurance Premium Tax – $47.7MM (SFY ’22)
  • Financial Institutions Tax – $19.9MM in both SFY ’22 and ‘23.

Established by the 131st General Assembly, the Tax Expenditure Review Committee is required to review all tax expenditures during an eight-year period, with reporting deadlines set for July 1 each even-numbered year.  (Note the 2020-required report was delayed by the COVID-19 pandemic.  That said, the Committee has suffered since its inception from a lack of attention or a sense of urgency by the legislature.)

House Bill 6 legislative repeal measures multiply like rabbits:  No less than five (5) bills have been introduced thus far in the General Assembly’s two chambers to repeal elements of House Bill 6’s nuclear plant subsidies.  Specifically, HB 10, HB 18, HB 57, SB 10, and SB 44 – all described in more detail, below – have been introduced early in the 134th General Assembly to remove elements of now-tainted HB 6 enacted during the previous session.

For the Senate’s part, President Matt Huffman (R-Lima) desires relatively quick action to resolve the HB6 dilemma, with his preferred approach to make a value judgment as to each provision of HB 6 separately, rather than pursue a larger comprehensive repeal plan.

Federal News:

New Round of COVID Relief:  House Democrats are drafting a new COVID-19 relief bill modeled after President Biden’s proposed $1.9T in federal response announced in January.  A floor vote in the U.S. House is expected next week (the week of Feb. 22.); Congressional leaders are intending for the final bill to be signed by President Biden in early March.

As of this report, the Biden plan – via the House – includes an extension of unemployment benefits through September 2021, $1,400 direct payments to individuals (which will phase out slowly for individuals earning more than $75,000, and checks are limited to households earning less than $200,000), and providing $350B in revenue replacement aid to state and local governments.

An alternate $618B plan was presented February 1 by a group of ten Republican senators to lower the direct payments to $1,000 (to persons making less than $50,000/year), extend federal unemployment insurance to June (not September), and removing the revenue replacement for state and local governments.

In the midst of this negotiation, the nonpartisan Congressional Budget Office projected on February 1 the nation’s economy likely would return to its pre-COVID size by the middle of 2021, even if Congress was not to approve this additional round of pandemic relief.  That said, the same report noted the national economy could absorb substantial new federal assistance without impact on inflation or causing the Federal Reserve to increase interest rates on borrowing.  The positive outlook stems from the CBO determining that large sectors of the nation’s economy adapted better and more rapidly to the pandemic than original expected.  Further, these projections saw benefit to the $900B relief package passed in late December, which included $600/person direct payments distributed and extended unemployment benefits.

Relatedly, Federal Reserve Bank officials have stated they will maintain current interest rates at near 0% and continue buying government-backed debt to stoke growth.

PENDING LEGISLATION IN THE 134TH GENERAL ASSEMBLY

SENATE BILLS:

SB 8 BROADBAND SERVICES (McColley, R.)  Introduced on January 21, 2021, this bill addresses broadband expansion, including access to electric cooperative easements and facilities, and to make an appropriation.  Note the companion House Bill 2 in the lower chamber.

This bill is a refresh of House Bill 13 (133rd General Assembly), which failed in the final stretch to enactment during the lame duck last session.  Sponsor Sen. Rob McColley (R-Napoleon) notes this version represents a negotiated substitute bill that had been poised for adoption last December.

This bill seeks to establish an Ohio Residential Broadband Expansion Program to incentivize internet providers to construct last mile infrastructure to underserved areas, particularly in rural Ohio.  Changes since the last General Assembly’s version include moving the program to ODSA, with the agency reviewing grant applications for the proposed Broadband Expansion Program Authority.

After three hearings before the Senate Energy & Public Utilities Committee during late January and February, the Senate unanimously adopted the measure on February 10; it now moves to the House.

SB 10 ELECTRIC RATES (Romanchuk, M.). This bill seeks to repeal the so-called “decoupling mechanism” that provided FirstEnergy with annual guaranteed revenue at 2018 levels – or $978MM/year.  The bill also modifies the significantly excessive earnings test (or SEET) determination for an electric security plan, and provides refunds to retail electric customers in the state.

During February, the Senate Energy & Public Utilities Committee held three hearings, and reported out a substitute version of the measure on February 9.

SB 13 CONTRACT LIMITATIONS (Lang, G.). This bill shortens the period of limitations for actions upon a contract; makes changes to the borrowing statute pertaining to applicable periods of limitations; and establish a statute of repose for a legal malpractice actions.  Note the companion HB 53 in the lower chamber.  The bill was heard and reported out by the Senate Judiciary Committee in early February, passed the Senate by unanimous vote on February 3, and has been referred to the House Civil Justice Committee.

SB 19 TAX EXEMPTION (Schaffer, T.) Introduced on January 26, this bill establishes a property tax exemption for certain property used for wetland mitigation projects.  The Senate Ways & Means Committee has heard the bill twice, with its third hearing scheduled for February 16 (or 17th, given the current snow emergency).

SB 32 CHARGING STATIONS (Rulli, M.) This bill would require the Director of ODOT to establish an electric vehicle charging station grant rebate program and to make an appropriation.  Note the companion HB 47 in the lower chamber.  This measure is scheduled for its first hearing before the Senate Transportation Committee on February 17.

SB 44 ENERGY LAW (Rulli, M., Cirino, J.) Introduced on February 2, 2021, this bill seeks to repeal the nuclear resource credit payment provisions, and amend, and rename as solar resource, the renewable resource credit payment provisions of H.B. 6 of the 133rd General Assembly.

Sponsors Sen. Jerry Cirino (R-Kirtland) and Sen. Michael Rulli (R-Salem) note their proposal takes a more targeted approach to addressing the ongoing uncertainty over the future of last session’s HB 6.  Specifically, this bill repeals the nuclear subsidies program portion of HB 6 while maintaining previous bill’s $20MM in annual solar subsidies.  All other aspects of HB6 would remain in place.  By design, Sen. Cirino noted, “It doesn’t open up the whole of House Bill 6 for negotiation”; the Senator represents a district in which is located one of the subject nuclear energy plants.

The measure is scheduled for its first hearing before the Senate Energy & Public Utilities Committee on February 16 (or 17th, given the current snow emergency).

SB 45 TAX INDUCEMENTS (Peterson, B., Kunze, S.) Introduced on February 2, 2021, this bill seeks to enhance state and local tax inducements for businesses making substantial fixed asset and employment investments and their suppliers.  The measure is scheduled for its first hearing before the Senate Ways & Means Committee on February 16 (or 17th, given the current snow emergency).

SB 52 WIND FARMS (Reineke, B., McColley, R.) Introduced February 9, 2021, this bill requires inclusion of safety specifications in wind farm certificate applications, modifies wind turbine setbacks, and permits a township referendum vote on certain wind farm and solar facility certificates.  The measure is scheduled for its first hearing before the Senate Energy & Public Utilities Committee on February 16 (or 17th, given the current snow emergency).

State Offers Tax Credit to Redevelop Ohio Neighborhoods

The Ohio Department of Development (Development) announced today that the application for the new Transformational Mixed-Use Development Program is open. The program provides a tax credit for major, mixed-use developments in Ohio. Applications are now available on Development’s website.

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$500 Million Available for Brownfield Funding in Ohio

Ohio’s 2022-2023 budget recently signed by Governor DeWine, allocates $500 million in new brownfield funding. Funding will be administered by the Ohio Department of Development (ODOD) which must adopt rules for allocation of brownfield funding and the demolition program. The rules will determine project eligibility and administration of the program.

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